A Simple Introduction to Ethereum
What is Ethereum?
- Blockchain for decentralized apps
- Rather than decentralizing currency, it can have potential applications to decentralizing voting systems, user account information such as Facebook accounts, real estate contracts…
- Ethereum’s goal is to decentralize the internet (decentralize away from high traffic websites such as Google, Amazon, Netflix, Ebay etc…)
- For example, apps can rent hard drive space directly from another user and eliminate services like Dropbox entirely
- Drivers can offer services directly to another user and remove the middleman like Uber
How Ethereum Works?
- Solidity is the programming language used to create smart contracts used to run the decentralized apps
- Smart contracts are a set of conditions and actions (if and then logic). Example is if I paid my landlord $500, then my landlord lets me rent out a room for a month.
- Developers write their conditions for the smart contracts, and the Ethereum network executes it
- Network deals with enforcement, management, performance, payment
- Smart contracts are self-executing and letter strict (no exclusions)
- Smart contracts are immutable.
- Smart contracts are difficult to secure because the more complex the contract becomes, the more difficult it becomes to enforce and manage.
Ethereum as a currency
- Ether is the incentive to pay miners to process smart contracts
- This makes it an incentive for app developers to write more efficient code so it wouldn’t waste the network resources
Understanding the Cost of a Smart Contract
- Takes account of 3 variables: 1) Gas price (Gwei), gas limit, and market price of Ether
- Gas in Ethereum terminology refers to the basic fuel that powers the network, be it for deploying smart contracts or for hosting dApps (decentralized applications) on the network.
- Contract involves three parties — a sender, a recipient, and an agreed upon arbitrator
Gas and Gwei Explained
- gasCost (ether) = gasPrice * min(gasCost, gasLimit)
- Gwei or gas is unit of ether. 1 eth = 1 billion Gwei
- By setting up Gwei, you are saying how much fee you are willing to pay
- Fee goes to miners. Higher the fee = faster the approval
- More complexity = more Gwei/Gas is required
- Maximum amount of gas for every block of transaction. If you set the gasLimit too high, it’ll fill the block. If the gasLimit differs significantly than the gasCost, then it’s less attractive to miners because the block is worth less money to execute
- Block Size
- Block Time
- Gas Limit
- Gas price
- Average Transaction Fee
- Blocks per Day
- Gas ued per Day
- Market Cap
- Hash rate
- Transaction fees per day
- Network utilization
- Transactions per day
- Uncle Rate
- Uncle Rate per day
- Link to data